A servant to many masters: Competing shareholders preferences and limits to catering

A. Manconi, M. Massa

Research output: Contribution to journalArticleScientificpeer-review

4 Citations (Scopus)

Abstract

We study what determines catering through the payout policy and how catering affects firm value. We create a catering index, measuring how the firm caters to its investors’ payout preferences. The index is based on the revealed payout preferences of mutual funds holding the firm’s stocks. Catering is constrained by market segmentation and dispersion in investor payout preferences. It is also associated with positive value effects: Firms increasing their catering index also experience an increase in value. Furthermore, greater catering ability is associated with a more positive market reaction to corporate announcements of equity issues and dividend payouts.
Original languageEnglish
Pages (from-to)1693-1716
JournalJournal of Financial and Quantitative Analysis
Volume48
Issue number6
DOIs
Publication statusPublished - Dec 2013

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